This document analyzes the contribution of the plantation sector to economic growth in North Sumatra, Indonesia using a Social Accounting Matrix (SAM) analysis of data from 2013. The key findings are: 1. The palm oil and crude palm oil industries had the highest value added multipliers, indicating they gave the largest contribution to income and economic growth in North Sumatra. 2. The palm oil, crude palm oil, and vegetable oil industries had the highest household induced income multipliers, showing they had the strongest positive impact on household incomes in the region. 3. Overall, the SAM analysis found that the palm oil sector and its downstream manufacturing industries made the most significant contributions to economic growth and household

1. International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org || Volume 5 Issue 2 || February. 2016 || PP-56-59
www.ijbmi.org 56 | Page
Assessment of Plantation Sector Contribution to the Economic
Growth in North Sumatra, Indonesia: Social Accounting Matrix
Multiplayer Analysis
Ateng Hartono, Prof. Dr. Sya’ad Afifuddin, SE, M.Sc dan Dr. Rahmanta, M.Si,
Dr. Dede Ruslan, M.Si
(Doctorate Program Universitas Sumatra Utara Indonesia)
Abstract: Plantation sector as the most important sector of the Indonesian economy which holds a lot of
potentials for the future economic and income development of the nation. This research aimed at finding the
contribution of plantation sector toward economic growth in North Sumatra using Social Accounting Matrix
(SAM) analysis. A SAM can be used as a basis for an economy-wide model with several appealing features. It
represents a very general accounting model, which subsumes all possible ‘real-life’ national accounting
systems. Based on the SAM analysis it was found that plantation sector gives a significant influence on
economic growth in North Sumatra, Indonesia. The biggest contribution comes from palm oil and its
manufacturing such as CPO, vegetable oil and other similar product. Moreover, Plantation sector also give a
significant influence to the household income. This can be showed from HIM of palm oil which reached IDR
1,4348 billion, followed by CPO, vegetable oil and similar product that reached IDR 1,3668 billion. In addition,
Rubber oil reached IDR 1, 3628 billion that also categorized high.
Key words: plantation sector, economic growth, Social Accounting Matrix (SAM) analysis
I. INTRODUCTION
North Sumatra is one of the provinces in Indonesia. In 2014 regional domestic income of North
Sumatra contributes around 5.4% to the National income in which it was placed as the fifth top ten national
income contributors. The economic growth of North Sumatra from 2010 to 2014 was 6.61% a year. The rate
was higher than the rate of National economic growth in which the number only reaches 5.84 % annually. This
rate indicated that North Sumatra is one of the leading provinces in Indonesia
One of the economic sectors that contribute much on economic growth in North Sumatra is from
plantation sector. As stated by Hartono (2015) plantation sector is still a major sector in North Sumatra,
Indonesia. Basically it provides employment opportunities for eradicates poverty and contributes to the growth
of the economy. The pervasive influence of plantation on economic growth, especially in rural area. Kilkenny
(1993) has also been articulated that plantation sector has built the economic center in some rural areas in
Indonesia. Obidzinski (2012) said that strong and efficient plantation sector would enable a country to feed its
growing population, generate employment, earn foreign exchange and provide raw materials for industries. The
plantation sector has a multiplier effect on any nation’s socio-economic and industrial fabric because of the
multifunctional nature of agriculture
Hill (1998) also stated that stagnation in agriculture is the principal explanation for poor economic
performance, while rising plantation productivity has been the most important concomitant of successful
industrialization. This research aimed at finding the contribution of plantation plantation sector toward
economic growth in North Sumatra using Social Accounting Matrix (SAM) analysis.
II. LITERATUR REVIEW
Sadono (2013) described plantation sector as the most important sector of the Indonesian economy
which holds a lot of potentials for the future economic and income development of the nation as it had done in
the past. Generally, the plantation sector contributes to the development of an economy in four major ways-
product contribution, factor contribution, market contribution and income contribution (World Bank, 2007).
Noorsalim (2009) defines plantation as the science of making use of the land to raise plants. It is the
simplification of natures food webs and the rechanneling of energy for human planting.
Bautista (2000) has descibe that agriculture is the profession of majority of humans. The United
Nations Organization (2008) estimated that the world as a whole, over 50% of the world population is engaged
in agriculture or dependent of it for a living, this is a general description of the sector. On the other hand, it
includes farming, fishing, animal husbandry and forestry.

2. Assessment of Plantation Sector Contribution to the Economic…
www.ijbmi.org 57 | Page
III. RESEARCH METHODS
The number of studies that analyze the linkages between agriculture and the rest of the economy using
a SAM framework has noticeably increased over the recent years. A SAM can be used as a basis for an
economy-wide model with several appealing features. It represents a very general accounting model, which
subsumes all possible ‘real-life’ national accounting systems (Rocchi et all, 2005). However the application of
SAM in North Sumatra hasn’t been done yet to measure plantation sector contribution to the economic growth
in north sumatra, indonesia.
The main data of SAM analysis was taken from of Statistical Bureau of North Sumatra in 2013. And
the additional data including the national economic and social survey, plantation census in 2013, the north
government financial statistic, the census of small, medium and large industry was used to complete the data.
The multiplier matrix was developed using the following equation:
Y = M
a
X ............................................. (1)
where M
a
is multiplier matrix. The equation describes than in every change of endogenous output
balance eksogen j as one unit will influence to the endogen balance i as amount as M
a
X, where M
a
is double
matrix. Total diferential of Y is:
dY
i
= Ma
ij
dX
j
.................................... (2)
so the transformation equation will be dY
i
/dX
j
= Ma
ij
, in this case dY
i
showed the cange of endogen balance -i
(for example household change), dX
j
is the change of excogen j (for example is the output of investation that is
allocated to one sector like plantation), and Ma
ij
is addition of balance i to j.
The equation model described that in every output of endogen j as 1 unit will give influence to endogen
balance I as 1 unitP and balance I will also change as Ma unit.
Some impact analysis of exogen balance that is used in the data analysis were : Value Added Multiplier
(VAM), Household induced income multiplier (HIM), Firm Income Multiplier (FIM), Other Sector Income
Multiplier (OTSM), Owner income muliplier (OWM), Production Multiplier (PM), Gross Output Multiplier
(GM) dan Government Income Multiplier (GIM).
IV. RESULT AND DISCUSSION
The result of North Sumatra Multipliers analysis in 2013 can be seen in the following table:
Tabel 1. North Sumatra Multipliers analysis of Plantation in 2013
SEKTOR VAM HIM FIM GIM OTSM OWM PM GM
A. Plantation sector
1. Rubber 1.5646 1.3628 0.3742 0.1101 2.0461 1.1009 3.1470 6.5587
2. Choclate 1.2232 1.0780 0.2790 0.0836 1.5287 1.0745 2.6032 5.2670
3. Coconut 1.4575 1.2448 0.3744 0.1072 1.9547 1.1398 3.0944 6.2784
4. Palm Oil 1.6230 1.4348 0.3670 0.1103 2.0403 1.0534 3.0937 6.6288
5. Coffe 1.4898 1.3231 0.3288 0.0999 1.8926 1.1266 3.0192 6.2608
6. Other plantation 1.3277 1.1536 0.3206 0.0940 1.6742 1.1327 2.8068 5.7027
7. CPO, vegetable oil and similar
product 1.6015 1.3668 0.4148 0.1184 2.4360 1.1144 3.5504 7.0518
8. Tobacco industry 0.4478 0.3379 0.1628 0.0416 0.7307 1.1409 1.8717 2.8618
9. Rubber industry 1.1128 0.8866 0.3546 0.0943 1.7274 1.0915 2.8189 5.2672
B. Others sector
10. Rice 1.3596 1.2115 0.2956 0.0903 1.5378 1.1925 2.7303 5.6873
11. Poultry 1.3596 1.1229 0.3911 0.1076 2.0964 1.0641 3.1605 6.1417
12. Forestry 0.9585 0.8167 0.2491 0.0710 1.1868 1.0297 2.2165 4.3118
13. Fishing 1.3121 1.0047 0.4620 0.1191 1.5119 1.0703 2.5822 5.4802
14. Mining 1.0980 0.7509 0.4811 0.1168 1.1764 1.0258 2.2022 4.6491
15. Food and baverage industry 1.1701 0.9561 0.3474 0.0946 1.8027 1.3844 3.1871 5.7552
16. textile industry 0.0626 0.0469 0.0232 0.0059 0.0760 1.0748 1.1508 1.2894
17. carpentry 0.3417 0.2607 0.1213 0.0312 0.5101 1.0482 1.5583 2.3132
18. Paper industry
0.5173 0.3639 0.2164 0.0532 0.5985 1.1599 1.7584 2.9092

3. Assessment of Plantation Sector Contribution to the Economic…
www.ijbmi.org 58 | Page
19. Chemical Industry 0.2416 0.1818 0.0885 0.0226 0.3034 1.0461 1.3495 1.8840
20. Metal Industry 0.7759 0.6125 0.2539 0.0669 1.1376 1.2614 2.3990 4.1083
21.Other Industry 0.2058 0.1367 0.0945 0.0227 0.2155 1.0319 1.2474 1.7071
22. Electric and water 1.2520 0.8979 0.5056 0.1254 1.5636 1.0777 2.6413 5.4222
23. Building 1.2930 1.0342 0.4082 0.1088 2.1153 1.1225 3.2378 6.0820
24. Trading 1.6498 1.4054 0.4293 0.1224 1.9251 1.1833 3.1084 6.7153
25. Restaurant 1.3786 1.1220 0.4143 0.1123 2.5619 1.0398 3.6016 6.6288
26. Hotel 1.3856 1.0563 0.4925 0.1267 2.2600 1.0092 3.2692 6.3304
27. Transportation 1.3304 1.0546 0.4302 0.1138 1.7654 1.2698 3.0352 5.9643
28. Financial services 1.5499 1.2530 0.4766 0.1282 1.7671 1.4563 3.2233 6.6309
29. Individual and public services 1.4816 1.2711 0.3778 0.1084 2.1059 1.0488 3.1547 6.3936
Keterangan :
VAM =value added multiplier
HIM =household induced income
multiplier
FIM =firm income multiplie
OTSM = other Sector Income
Multiplier
OWM= owner income muliplier
PM =production income multiplie
GIM =government income
multiplier
GM=Gross Output Multiplier
Table 1 above showed that trade sector has the highest VAM Sektor, in which it reached 1,6498, it is
then followed by oil palm tree with the amount 1,6230.The VAM value of oil palm industry showed us that in
every IDR 1 billion endogen injection will give the income capital as IDR 1,6230 billion. Capital and labor
impact is one f the significant element of regional income rate, it means that oil palm industry can give a
significant impact of North Sumatra regional income as IDR 1,6230 billion.
The highest amount of palm oil industry also give significant impact of its manufacturing such as is
crude palm oil (CPO) industry, vegetable oil and others production, in which it is placed at the third highest
VAM value as 1.6015. This calculation indicated that palm oil industry and its manufacture give a significant
impact to the North Sumatra economic growth.
VAM calculation of rubber reached 1.5646 and it is placed at the fourth rank. However, this value were
not followed by its manufacturing, in which it was placed in rank 20 with the amount of VAM 1,1128. This
condition are influenced by the supporting industry of rubber manufacturing such as transportation and trading.
Another highest VAM was the coffee and coconut.
In addition, the calculation in table 1 was supported by the impact of plantation sector to the economic
growth in North Sumatra as can be seen in figure 1. Figure 1 showed that trading on the plantation product give
the highest contribution on North Sumatra economic growth with 14.79%. while the plantation sector that give a
biggest contribution on North Sumatra economic growth is CPO, vegetable oil and other similar product.
The rubber farming in which it has the high VAM only give 2,08% contribution to the economic growth.
Meanwhile the rubber industry in which it was placed at rank 20 of VAM give a significant contribution to the
North Sumatra economic growth with 2.58%
Plantation sector also give a significant influence to the household income. This can be showed from
HIM of palm oil which reached 1,4348, followed by CPO industry, vegetable oil and similar product that
reached IDR 1,3668 billion. Rubber oil reached IDR 1, 3628 billion that also categorized high. This HIM
calculation indicated that palm oil give injection to IDR 1 billion for IDR 1,4348 for household income.

4. Assessment of Plantation Sector Contribution to the Economic…
www.ijbmi.org 59 | Page
Based on the result of Plantation census in 2013, the rate of household income from plantation sector
reached IDR 7.90 billion rupiah. As a comparation, the rate of household income from rice farming is IDR 2.47
million, horticulture is IDR 1.47 million and fishing is IDR 1.54 million
In addition to this, others sector that has the highest HIM is trading sector, in which the amount reach
1,4556, social and individual service sector with 1,3960. Other sectors that give a high economic growth in
North Sumatra is financial sector, renting and company services, poultry and food sector.
The highest gross output multiplier (GM) was in CPO, vegetable oil and similar product which reached
7.0518. This GM spread to regional income incensement with amount of IDR 1,6015 billion, household
income (IDR 1,3668 billion), institution income( IDR 0.4148 billion) and government income (IDR 0.1184
billion), with total regional product of IDR 3,5504 billion. Thus the CPO, vegetable oil and similar industry
give a significant contribution to the domestic economic growth in North Sumatra.
V. CONCLUSION
Based on the calculation of VA, VAM dan HI it was found that plantation sector gives a significant influence on
economic growth in North Sumatra, Indonesia. The biggest contribution comes from pallm oil and its
manufacturing such as CPO, vegetable oil and other similar product.
Plantation sector also give a significant influence to the household income. This can be showed from HIM of
palm oil which reached IDR 1,4348 billion, followed by CPO, vegetable oil and similar product that reached
IDR 1,3668 billion. In addition, Rubber oil reached IDR 1, 3628 billion that also categorized high.
REFERENCES
[1] Accounts, G. Pyatt, and J. I. Round (Ed.) (2010), in Social Accounting Matrices: A Basis for Planning. Washington D.C: The
World Bank
[2] Bautista, R. (2000). Agriculture-Based Development: A SAM Perspective on Central Vietnam. The Developing Economies,
34(1), 112–132
[3] Hartono, Ateng. 2015. Hilirisasi Industri Alumunium Sebagai Motor Industrialisasi Sumatera Utara (Mewujudkan Mimpi
Industrialisasi Sumatera Utara, Berdikari di Bidang Ekonomi dan Terdepan pada Asean Economic Community 2015, Makalah
Juara ke 3 dalam Lomba Karya Tulis Ilmiah PT Inalum bekerja sama dengan Balitbang Sumatera Utara
[4] Hill, B., 1998. The Implication for Agricultural Statistics of Changes in the System of National Accounts. Journal of Agricultural
Economics 49(3): 359-77.
[5] Keuning, Steven. 1980. Social Accounting Matrices And Their Usefulness For The Measurment Of Social Welfare In Indonesia
[6] Kilkenny, M., 1993. Rural-Urban Effects of Terminating Farm Subsidies. American Journal of Agricultural Economics 75(4):
968-80
[7] Noorsalim, M. (2009). The Influence of Oil Palm Plantation Development towards Rural Kalimantan Community
[8] Obidzinski, K., R. Andriani, H. Komarudin dan A. Andrianto. 2012. Environmental and social impacts of oil palm plantations
and their implications for biofuel production in Indonesia.
[9] Sadono Sukirno, 2013, Ekonomi Pembangunan, Proses, Masalah dan Dasar Kebijakan, LPFE UI
[10] Stone, S. R. (1985). The Disaggregation of The Household Sector in The National
[11] Todaro, M. P. (1978). Economic Development in the Third World. New York: Longmen Inc.